Kesa struggles with poor Vision

Kesa Electricals says that full-year adjusted pre-tax profits should come in line with the mid-point of current market expectations, despite the firm experiencing 'weak' and 'volatile' trading conditions in the final quarter.

The electrical retailer said that continuing group revenue in the period between January 9th and April 30th (the end of the fiscal year) fell by 4.7% in euros and by 5.9% on a like-for-like (LFL) basis, mainly due to a 30% decline in its Vision division (TVs, DVD players, etc.) following the digital switchover last year. Nevertheless, White Goods sales increased and Mutlimedia achieved double-digit growth. Group web-generated sales rose strongly, up 13%.

The competitive markets conditions and product mix resulted in a 100-basis-point fall in the gross margin, compared with the same quarter last year.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

"Since last reporting in January trading conditions have been volatile and have remained weak in most of our markets, particularly in Vision and in Italy and Spain," said Chief Executive Thierry Falque-Pierrotin. "We are however continuing to see benefits from implementing the Darty concept and our strategic cross-channel focus, with strong growth in web generated sales, improvement in our positions at the Other established businesses and market outperformance in our Developing businesses," he said.

Its Darty business in France saw revenues drop by 8.6% (-10% LFL), with Vision remaining particularly weak. Nevertheless, the firm said that actions taken to improve efficiencies in the business (both in store and back office) have brought costs down year-on-year.

On the upside, 'Other Established' businesses (including BCC , Vanden Borre and Datart) saw a 6.2% increase in revenue, both in local currency and LFL. "All markets however were weaker than we had seen year to date." 'Developing' businesses (Darty Italy, Darty Turkey and Darty Spain) saw sales fall 3.2% in local currency but rise 0.8% LFL - the group assured that they were outperforming their markets, remained particularly weak in Spain and Italy.

During the year, Kesa has taken "significant steps to restructure the group", offloading struggling retailer Comet in the UK and completing a new telecoms agreement for Darty France.

BC